CBI calls for retailer levy to be delayed

CBI Scotland is demanding that Alex Salmond puts the controversial health levy on big retailers out to consultation for a year in line with his own calls for a similar policy to be applied in Westminster.

The First Minister last month called on Chancellor George Osborne to give oil and gas firms 12 months to dispute proposals such as this year’s shock North Sea tax raid, which caused uproar when it was announced as part of the Budget in March.

Salmond argued that a year-long mandatory consultation period on the tax would allow “UK ministers to think through the consequences of their proposals for a sector that is one of the greatest industrial success stories of our generation”.

Business leaders north of the Border are now pressing the Scottish Government to extend the same courtesy to the retail sector, which is facing an extra £110 million supplement over three years to meet Scottish finance minister John Swinney’s health levy.

From April, large retailers selling both tobacco and alcohol will be forced to pay the extra tax through their business rates, but enterprise groups argue that it has little to do with health and is simply a reincarnation of last year’s contentious “Tesco tax”.

David Lonsdale, assistant director of CBI Scotland, questioned why one rule should apply to one sector of the economy and not to another.

He said: “The Scottish Government vehemently objected to the UK administration’s tax grab earlier this year on North Sea oil and gas, and subsequently called for changes in business taxation affecting the sector to be subject to a year’s ‘statutory consultation’ before implementation.

“Yet Scottish ministers don’t seem keen to apply this very same principle to a business tax decision that is under their control – namely their new £110m business rates levy on retailers. We need a convincing explanation for the inconsistent approach being taken.”

Lonsdale warned that the health levy would see Scotland lose out on investment by major retail chains to England and Wales. “After all, why build a new store in Dundee if you can build one in Derby where the tax regime is more accommodating?” he said.

A Scottish Government spokesperson said: “The draft budget is a consultation and any legislation will, of course, be subject to the usual parliamentary scrutiny and process.

“The UK government tax rise on the oil and gas industry will cost around £3 billion. The public health supplement will raise a fraction of that amount, at £30m/£40m/£40m across the three-year spending review period.”